Review Articles: AN EMPIRICAL STUDY OF THE EFFICACY OF MIXED-USE DEVELOPMENT: THE SEATTLE EXPERIENCE

AbstractOver the past decade mixed-use real estate has received significant attention amongst real estate practitioners including both developers and city/regional planners. This attention is understandable especially in light of renewed interest in urban revitalization and sustainable real estate development. Unfortunately, little empirical research has been conducted to identify the critical success factors for mixed-use development. This paper addresses this void and explores some fundamental questions surrounding when, why, and where mixed-use development is viable. It begins with an extensive literature review to help identify issues surrounding mixed-use development. It then explores some "lessons learned" in mixed-use development in Seattle where such projects have been encouraged by policy makers and other constituencies.MIXED-USE PROJECT OVERVIEWDEFINITIONOn the surface it might appear that the definition of what constitutes a mixed-use project would be relatively straightforward. The reality, however, is much more complicated with the label being applied to a variety of alternative types of buildings, land uses, and tenant mixes. For this study, mixed-use projects are treated as distinct from multi-use projects with which they are sometimes confused. In general, a mixeduse project can be defined as an individual project in which two or more distinct property types (e.g., office, retail, residential, hotel) are included in a single structure. In many cases these buildings feature retail or commercial uses on the first floor, which are ancillary to the residential or office uses that are often located on the upper floors. On the other hand, multi-use projects may contain the same components, but the various facilities are located in multiple structures that are somehow connected rather than in a single vertical structure. Since each of the types of projects may have multiple buildings, uses, and/or tenant spaces, individual projects often must be physically inspected or researched to ensure they are properly classified.In an effort to formulate an industry-wide definition, the International Council of Shopping Centers, Inc. (ICSC), the National Association of Industrial and Office Properties (NAIOP), the Building Owners and Managers Association International (BOMA), and the National Multi Housing Council (NMHC) collaborated on a crossorganizational effort to define mixed-use developments. This effort was undertaken to resolve some of the ambiguity surrounding mixed-use development and to provide greater transparency designed to improve market efficiency and reduce the unexpected risks associated with such projects. The definition was released at an industry-wide conference in 2006: "A mixed-use development is a real estate project with planned integration of some combination of retail, office, residential, hotel, recreation or other functions. It is pedestrian-oriented and contains elements of a live-work-play environment. It maximizes space usage, has amenities and architectural expression and tends to mitigate traffic and sprawl."1EVOLUTION OF MIXED-USE DEVELOPMENTAlthough mixed-use development activity surged in the past two decades leading up to the commercial market collapse in 2007, the notion of mixed-use projects is not new. Mixed-use development has been an integral part of the urban landscape for centuries. This is especially true in Western Europe where mixed-use projects have been synonymous with small town living. Similarly, many large cities in the United States were built on the backs of mixed-use projects. Some of the interest in mixeduse development was dampened by the adoption of the Standard Zoning Enabling Act (SZEA), which advocated a separation of land uses rather than an integration of uses. The rationale for separating land uses was based on recognition that some uses are incompatible with others and can create negative externalities to the detriment of individual land owners and the communities they comprise. …